Tánaiste and Minister for Enterprise, Trade and Employment, Leo Varadkar, committed some weeks ago to special help for large exporters that are also energy intensive, raising the possibility that in an energy shortage, triggering a rationing regime for gas, electricity or both, firms which export energy would get priority.

This sounded odd at the time – if energy gets scarce and cannot be allocated through the market, why would the Government allocate to firms which use lots of energy and ship the embodied energy abroad? If it is scarce, why allocate against the interests of less obvious targets?

Favour should surely be shown to exporters which use energy but which have deep linkages back into the Irish economy. There is a big difference between a dairy processor and a data centre.

Dairy companies buy inputs on a large scale in Ireland, generate income and employment through their purchases, but do indeed use quite a lot of energy and ship out the product.

But the data centres gobble energy, employ very few people and also ship out the product. Their capital equipment is imported too, and it is a curious business for Ireland to promote.

The IDA has not managed to explain, or even tried to, its strategic thinking, aside from keeping the tech companies happy. The Tánaiste has not done so either. The data centres use piles of energy and the experts in electrical engineering have been unhappy about IDA policy for many years. Data centres are not the only odd fellows in industrial energy demand but it was puzzling for the IDA and the Tánaiste to signal that they would get preference if push came to shove.

Support

In the two-handed budget speech on Tuesday, Paschal Donohoe outlined a scheme of support for smaller companies facing higher energy bills, with a low cap on the amount of annual subvention for each firm.

Clearly large firms, including data centres and big operations in other exporting sectors which have high energy bills like Aughinish Alumina, were to be excluded. So where was the Tánaiste’s pledge to exporters with high energy bills?

It was reasonable to imagine, I did, that the Tánaiste had lost the argument that big energy using export firms would get generous treatment. But the second leg of the budget speech, from Michael McGrath, Minister for Public Expenditure, contained, without any details, the following: “In addition to the Temporary Business Energy Support Scheme announced by Minster Donohoe today, the Government this morning approved a Ukraine Enterprise Crisis Scheme worth €200m for firms operating in the manufacturing and/or internationally traded services sectors.”

Oh. So in support of Ukraine, there is to be €200m of support for unidentified firms on the back of public sympathy for the victims of Vladimir Putin’s invasion of the Ukraine?

Who are these firms? Are they Ukrainian companies, Irish companies buying from Ukraine? Or is this a catch-all title to cover spending yet to be identified?

If the latter, what is the connection to the budget and help to firms suffering from energy cost concerns, which are not specific to firms connected in bilateral trade with Ukraine or with any one country – energy costs have shot up for everyone.

The ministers were able to offer considerable detail in their budget statements which lasted for 90 minutes, including detail about overseas aid allocations. It looks like a deliberately chosen piece of obscurity to mix up aid to companies struggling with energy bills and bilateral help for Ukraine.

If there is to be a shortage of gas or electricity over the winter, sufficient to require actual rationing, it will be necessary to work out an allocation formula for industrial and all other users.

Priorities

There will be priorities, for example hospitals and security services, and clearly some large volume customers will face loss of power at short notice.

Who are these to be? From an economic policy standpoint, it would make sense to focus on interrupting a small group of big customers, hopefully for short periods and with decent notice. If these have been identified, it is time to let then know, and to explain the basis on which priorities have been selected.

Of course it may not be necessary to switch off customers, for gas or electricity, but it has already been announced that a rationing scheme is being developed, just in case. There are priorities which cannot be ducked, and it would be best if firms knew where they stood.

Those larger companies too big to qualify for reliefs under the scheme outlined by Paschal Donohoe will be curious to know where they stand.

Will large export manufacturers enjoy a special scheme as the Tánaiste promised, what are to be the rules, and will it be based on transparent criteria?